Disney board extends CEO Iger's contract by one year

Disney's Chief Executive Officer Bob Iger holds a news conference at Shanghai Disney Resort as part of the three-day Grand Opening events in Shanghai, China, June 15, 2016. REUTERS/Aly Song

LOS ANGELES (Reuters) - Walt Disney Co’s board (DIS.N) extended the term of Chairman and Chief Executive Officer Bob Iger by one year as it continues searching for a successor to a long-serving leader who is popular on Wall Street, the company said on Thursday.

The extension, until July 2, 2019, is a third for the 66-year-old Iger, who said last month he was open to extending his term. Originally, Iger had said he would retire in April 2015, but he then agreed to stay through June 2016 and then later to remain until June 2018.

Disney shares closed 0.1 percent higher at $112.24 on the New York Stock Exchange.

Disney, the world’s largest entertainment company and owner of sports network ESPN, a movie studio and theme parks around the world, is still searching for a capable hand to step into Iger’s shoes.

Speaking on Thursday at a technology and entertainment conference, Iger said he and the board agreed “we could use more time to not only spend on succession but to create a better transition.”

“I feel great about it, but I‘m serious this time around ... I promise,” he said in an interview conducted by his wife, journalist Willow Bay. She is the incoming dean of the University of Southern California’s Annenberg School of Communication and Journalism, which co-hosted the event with USC’s Marshall School of Business.

Iger will remain a consultant to Disney for three years after his chairman and CEO term ends.

Orin Smith, independent lead director of Disney’s board, said the company and shareholders “will be best served by (Iger‘s) continued leadership as the board conducts the robust process of identifying a successor and ensuring a smooth transition.”

Cowen and Company analyst Doug Creutz, who rates Disney “market perform,” said the news was “largely neutral” for the stock given the relatively short extension and because no successor was named.

Iger, who became Disney’s CEO in 2005, orchestrated successful acquisitions of Pixar Animation Studios, Marvel Studios and “Star Wars” producer Lucasfilm. He also oversaw the building of Shanghai Disney Resort in China and expansions at Disney’s U.S. theme parks.

Investors have seen a total shareholder return during Iger’s tenure of 448 percent, compared with 144 percent for the S&P 500 during that time, Smith said.

However, Disney has recently faced questions about the future of ESPN, which has lost subscribers as younger viewers move away from traditional pay television packages.

Disney’s former chief operating officer Tom Staggs had been seen as the likely replacement for Iger, but he unexpectedly left the company in 2016.

In a regulatory filing, Disney said Iger's annual compensation for the extended employment period remained unchanged. He will receive a $5 million bonus for staying an extra year. bit.ly/2mwc3Jn

Additional reporting by Aishwarya Venugopal in Bengaluru; Editing by David Gregorio and Leslie Adler